Not-for-profit Law
Legal help for community organisations

New requirement from 1 July 2023 for not-for-profits who self-assess for income tax exemption

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Treasury announced in the 2021-22 Budget that, from 1 July 2023, non-charitable income tax exempt not-for-profits with an active Australian Business Number will need to submit online self-review forms to the ATO to remain eligible for the exemption.

Previously, not-for-profits have not been required to provide their self-assessments to the ATO, or obtain confirmation of their income tax status. The new measures are intended to enhance trust and confidence in the sector by increasing transparency around the exemption to ensure only eligible not-for-profits access income tax exemptions. The Federal Government has allocated $1.9m to the ATO to build the online system. The review process is expected to be similar to how not-for-profits already conduct their self-assessment. Failure to lodge the form may trigger penalties under the ATO’s penalty framework and loss of the not-for-profit’s exemption.

While the new measures will add to annual reporting obligations, the ATO’s confirmation of exemption may give comfort to not-for-profits from a compliance perspective, particularly regarding penalty concerns should the organisation be subject to an ATO audit.

You can find more information about income tax exemptions on our website, including a handy app to assess your eligibility. The ATO also has a review worksheet for self-assessment.